Finance Bill 2019-20: HMRC confirm how VED changes will impact on company car benefit rules

Released 11 July 2019

HMRC have published a policy paper setting out how the changes to the vehicle excise duty (VED) rules, which take effect for new vehicles registered from 1 April 2020, will affect individuals and employers who provide company cars for employees.

For cars measured under the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), most appropriate percentages will be reduced by 2 percentage points in 2020-21, compared to the current appropriate percentages for cars with emissions measured under the New European Driving Cycle (NEDC). The appropriate percentages will then be increased by one percentage point for each of the tax years 2021-22 and 2022-23. This means that in 2022-23, the increase will bring the appropriate percentages back to their published rates.

Changes are also being made to the appropriate percentage figures for all cars classified as being zero emission vehicles (ZEVs) under both the NEDC and WLTP test procedures. The appropriate percentage will be reduced to zero per cent for the tax year 2020-21 and will be increased by one percentage point for the tax years 2021-22 (to 1%) and 2022-23 (to 2%). In 2022-23, the increase will also bring the appropriate percentage back to their published rates.

For cars registered on or after 1 October 1999 but before 6 April 2020, the CO2 emissions figures for company car tax and related charges will continue to be based under the NEDC procedure.

View Taxable benefits and rules for measuring carbon dioxide emissions.

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